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TMCNet:  King of canary

[October 13, 2008]

King of canary

(Estates Gazette Via Acquire Media NewsEdge) "We all die but what matters is how we live our lives," says George Iacobescu, who has spent the past 21 years living and breathing the development that has cemented Britain's position on the world financial stage.
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For all of Canary Wharf's knocks during its tumultuous life, when the 62-year-old collected the inaugural trophy for outstanding contribution to property at the EG Awards on 30 September, guests at the Great Room of London's Grosvenor House hotel gave a collective murmur of approval. It was testament to the hard work that Iacobescu has put into reshaping the capital's physical and financial landscape.

It is hard to imagine the remarkable personal journey he has also made to get here.The only child of a Romanian doctor, Iacobescu was 20 years old when Nicolae Ceausescu came to power. He trained as a structural engineer at Bucharest university and got a job designing pumping stations for the state. But the desire to get out of Romania was overwhelming.

He says: "It was very difficult to leave but I was lucky enough to have an aunt in Canada. It took her three years to put together $5,000 and buy me out of Romania. There was a time when the country's best export was people - so Romania was selling people."

By the time he got his passage to Montreal in 1975, Iacobescu was engaged to Gabriela, a fellow Bucharest university graduate. But there was not enough money to buy both of them out. "It took me about two years and an enormous struggle to get her out," he remembers. "I ended up writing to practically every head of state in the Western world to get the Romanians to allow people to leave."

Finally, economic pressure from the West could not be ignored. "For just two days, the Communist regime repealed a law which prevented us from getting married, so I flew to Romania and got married," says Iacobescu. "That's how finally my wife got out, along with many others."

Life in the West began with a night job repairing fire-damaged high rises in downtown Montreal. It was a chance conversation at a party that brought Iacobescu into the Reichmann empire. He recalls: "I went for a cocktail in somebody's house and met the vice-president of Olympia & York. I didn't know the name of the company or anything like that. I talked to him for two hours and then realised that was my interview. And on Monday I was offered a job."

Working for what was then one of North America's largest developers took Iacobescu to Chicago and New York - where he worked on the World Financial Center - and finally, in 1987, to London to work on the Docklands.

Today, with the estate's obvious dependence on demand from financial occupiers, the road ahead appears as bumpy as ever for Iacobescu. At his offices on the 30th floor of One Canada Square, he glances warily at the news report flashing up on the plasma screen: "US bank bail-out talks stall at Congress."

Just seconds later, he is striding around the vast three-dimensional map of London in the company's marketing suite, enthusiastically pressing buttons to light up the transport links that snake towards Canary Wharf - including a soft green strip that anticipates the Crossrail link for which he has rigorously campaigned.

After 10 years as chief executive, Iacobescu is a man well accustomed to rolling with the punches - showing the pragmatism and calm of someone who has seen plenty of tough times before. "There has been a lot of fun and a lot of pain," he says. "The company secretary can show you the scars on his back. I love my job, but it is not an easy job."

And he admits that the rapidly worsening financial climate presents a daunting prospect for many of the Wharf's occupiers. "The financial institutions have driven the growth of Canary Wharf," says Iacobescu.

A year ago, the prospect of one of these occupiers collapsing was unthinkable. But the death of Lehman Bros - which occupied 1m sq ft - has shown just how vulnerable Canary Wharf is to the unfolding crisis.

"What happened to Lehman is, of course, a disaster and very painful," says Iacobescu. But he is confident that - if necessary - the space will secure new tenants, thanks to the high quality of the building. Banking giant Nomura, which has taken on around 1,600 of Lehman's UK staff, could opt to keep some of the space, and there has also been an approach from Barclays.

"The reality is that the building is one of the three or four best to have ever been built in London," insists Iacobescu.

He credits this commitment to quality to Paul, Albert and Ralph Reichmann - the Canadian brothers who first brought him over to the UK to work for Canary Wharf's original developer, Olympia & York.

He recalls: "Albert Reichmann instilled in me the belief that you should never skimp on quality, never cut corners. He said it would be with you for the rest of your life.

"I think the proof of that will be in the Lehman building. I promise you that the building will find its own rightful buyers because it is such good quality."

A buyer must also be found for the 300,000 sq ft office under construction on the estate for the failed US bank Bear Stearns. JP Morgan is trying to sublet this space as part of its rescue of the business. And Iacobescu insists JP Morgan also remains in exclusive negotiations to take a new 1.9m sq ft HQ at Canary Wharf.

On a giant model of the estate in the marketing room, clear plastic boxes optimistically mark the spot at Riverside South. But is there any sign, amid the worsening banking crisis, that JP Morgan might walk away?

"We have not had any sign. If you look at what's happening with JP Morgan, if anything it is growing. It is emerging as one of the powerhouses in the world," says Iacobescu. "When the shake-up is over you'll have very powerful and very strong institutions and they will all need very good premises.

"JP Morgan will take things to a totally new level in terms of security of the corporation, quality of the building and technology. It will be a quantum leap. You can almost compare it to a car - the model gets better and better."

It is not the first time Canary has been faced with concerns over occupier withdrawal. In 2003, its infamous "put and call" policy came to light: in order to lure tenants to the estate, Canary had agreed to grant them options to hand back surplus space.

Its annual results revealed that 670,000 sq ft could be dumped back on the landlord's books. The policy left the company with a bloody nose and contributed to the ultimate sale of the business to the Songbird consortium led by Morgan Stanley Real Estate Funds in 2004.

Survivor of each Canary incarnation

It was the end of an epic journey for Paul Reichmann, who in 1987 negotiated the deal with Margaret Thatcher to develop the 86 acres of former London docklands, 2.5 miles to the east of the City but not for Iacobescu, who has remained at Canary Wharf through each corporate incarnation.

"You could say it was a major adventure for the company and Paul Reichmann," says Iacobescu. "It took an enormous amount of vision, but that vision was backed up by a lot of research. In 1987, we went around most of the buildings in London and about 85% were obsolete for what the world was moving towards."

Several false starts and the odd financial disaster later (see panel above), the vision has been realised.

"We were convinced that this development would be successful," says Iacobescu. "History has proven that you have to wait a little bit, but if the business plan is right and the principle of what you're doing is right, ultimately it will come to fruition."

He is not the only member of that original team still in place. "Personally, I deserve only a passing reference in the history of Canary Wharf. I'm part of the team, I don't see myself as running the show," he smiles.

And with that, he says his goodbyes and slips out of a side door behind one of the marketing models.

EG Awards in full, pp72-105

By George, he's achieved a lot

1945 Born in Romania, the son of a haematologist

1975 Iacobescu, a graduate in civil engineering, leaves Romania - after his aunt in Canada pays $5,000 to buy him out

1975-1978 Construction director at Homeco Investments, Montreal and Toronto

1977 Marries Gabriela and succeeds in getting her out of Romania

1978-1987 Joins Olympia & York as construction director and rises to vice- president works in New York and Chicago

1987 O&Y takes over at Canary Wharf

1988 Iacobescu moves to London as senior v-p on the project construction starts

1992 O&Y collapses and Paul Reichmann cedes control of CW to administrators

1993 Canary Wharf exits administration

1995 Reichmann regains control of CW after pulling together an international consortium to buy it back for ?820m he appoints Iacobescu deputy chief executive of Canary Wharf Group

1997 Iacobescu made chief executive

1999 CW floated on the LSE

2003 CW's results show that 670,000 sq ft could be leased back to the company by its tenants shares fall and takeover battle begins Iacobescu is awarded the CBE

2004 Morgan Stanley-led consortium Songbird takes over Iacobescu stays on

Lifestyle Lives in Mayfair with Gabriela. Daughter Julie setting up a fashion business in Romania

Copyright ? 2008 Reed Business Information - UK. All Rights Reserved.

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